5 tips to getting your car loan Pre-Approved
Anyone who has struggled with poor or bad credit will know the frustrations of going through a loan pre-approval system only to be denied at the very end. It could also be that it’s the first time you’ve applied or that you’re self-employed in a contracting industry.
Whatever the reason, the outcome almost always has to do with risk but different lenders have different risk appetites. That said, the loan must never be unsuitable and always affordable. Ensuring this is an obligation that lies with the lender and credit assistance provider.
Here are five ways to improve the odds of your loan application being approved.
Fix up Any Outstanding Debts and Show You Can Save
One of the best things you can do when approaching lenders is prove that you’re paying off existing debts and capable of saving money while doing so — especially if you’re looking to borrow a large amount that’s a high percentage of the vehicle’s value.
Setting money aside makes it easier for you to meet the requirements of a deposit. This, in addition to increasing your loan affordability, will reduce the amount of risk involved from the lender’s point of view. As a result, the viability and strength of your application is increased.
Look for a Car That Won’t Break the Bank
It’s important to remember that a vehicle’s sticker price is not the financial ceiling but is instead a portion of what you could end up paying. So before you make any kind of commitment, consider dealing with a Car Finder/finance specialist that can assist with narrowing down research time.
Also, try to pay for any extras you may want in cash as doing so will keep the value of the loan and your monthly repayments at a more manageable level. After all, you will have to pay it all back with interest.
Shop for a Loan Before You Visit a Dealership
If your credit history is less-than-perfect, the process of getting your car loan pre-approved can be made simpler by applying online or phoning a specialist third-party credit assistance provider like NuStart Finance. Just remember that all pre-approvals are subject to satisfying credit approval criteria.
In general, this is where you’ll find the more competitive interest rates and if nothing else, you’ll walk away with a strong reference point for when you move forward with your research. Just be aware that if your application is rejected a number of times, your credit score will be adversely affected and things will become that much more difficult. For this and many other reasons, it is essential to engage the services of a credit assistance provider like NuStart Finance.
Be Willing to Put Up an Asset or Use a Guarantor
One of the most effective ways to gain a lender’s approval is to opt for a secured loan and use the car as collateral — which is standard practice in most lending circles. The other way you can go about getting a secured loan is to have someone co-sign or guarantee the loan on your behalf.
In this instance, the friend or family member who agrees to the commitment is legally obligated to pay back the loan should you be unable to. Of course, these two options will depend upon your individual preferences and what you’re comfortable with.
- Know Your Credit Score and Compare All Quotes
Ultimately, securing car finance comes down to knowing what you can and can’t afford. According to ASIC’s Moneysmart, some creditors may fail to send notice of outstanding debts, misreport defaulted payments or forget to update their records and you won’t want this to affect your standing, or chance of approval.
Once you’ve attended to any issues and have a clear understanding of what to expect, you can begin to approach a number of different lenders and ask for quotes.
As always, be sure to ask about any fees relating to initiating the loan and avoid extending the length of the loan in exchange for lower monthly repayments if you can, just so you don’t end up paying any more than you need to.
Loans organised through us have a fixed not variable rate of interest which means that while your repayments will never become lower they will never be higher. This helps with your budgeting and interest is calculated on the daily reducing balance so you can reduce the amount of interest you pay if from time to time you are able to make higher repayments in whatever amount. There is an early termination penalty which is not excessive and which reduces every month the contract runs.